BankNifty is headed to 34,000; Nifty is headed to 14,500. Be armed with risk-defined option strategy

Leading experts have opined, based on analysis of data, that the BankNifty (CMP 32,084) is headed to 34,000 while the Nifty (CMP 14,347) is headed to 14,500 over the next few days. We have to stay alert & arm ourselves with proper risk-defined strategies so that we get our due share of the gains

According to Pradeep Pandya, the markets editor of CNBC Awaaz, FIIs have taken aggressively long positions on the index futures on Friday. They have also loaded up on stock futures and built net longs there as well.



This analysis is corroborated by Nitin Murarka, an expert with SMC Global. He has explained that the rollover data for January 2021 clearly shows the bullish stance of the FIIs.



Anil Singhvi, the markets editor with ZEE Business pointed out that there are a number of shorts trapped in the system who have no escape route but to buy back their shorts at high rates, propelling the Indices in an upward trajectory.



An expert trader named Sahil Balani has conducted a technical analysis of the BankNifty based on Price Action and Volatility Contraction Pattern. He has opined that the Bank Nifty is en route to 34000 by the end of January 2021.

Risk-defined Option Strategies

The best to participate in these sorts of hypothesis is by adopting risk-defined options strategies. This way, even if the hypothesis is hopelessly wrong, we lose only a pre-determined sum of money and not more.

IIFL has recently released one such strategy. There are many more such strategies available such as the Bull Call Spread or the Bull Put Spread. An expert named DK Aggarwal has explained these strategies in an article in the ET (see How traders use Calls & Puts to gain from all market conditions).



Fundamental analysts have also expressed a similar view regarding the higher levels in Nifty & BankNifty.

Axis Capital has opined that the Nifty is headed to 16,800 by December 2021. It has recommended 9 top-quality stocks for us to buy.



Jefferies, the influential foreign brokerage, has endorsed this stance and projected a target of 15,800 for the Nifty. They have also recommended 10 stocks.